TRADERTALK
DynexCorp -
from systems to market pulse: a life long performance in currencies
e-Forex talks with Peter Panholzer of DynexCorp, one of the oldest Currency Management firms in the world.
Peter how long have you been in the Currency Management business and what attracted you to the industry?
I made my first currency trade in October 1973. After Bretton Woods, spot settlement rules were still in their infancy. At that time you had a choice of forward swaps, such as 30 days, 60 days, etc which could only be realised at expiry. At Ross Perot’s Dupont Glore Forgan office in Toronto arbitraging between 30-60 and 60-90 day swap spreads was a popular strategy. After 30 days your swaps mutated to spot-30 and 30- 60. If an expiry fell on a weekend and the invariably mean-reverting arbitrage happened to be in your favour, you could either earn settlement interest or roll the swap positions forward. It was a win win – now or later – situation.
Tat was two years after the gold standard had been abandoned – causing the big inflation of the 1970s – and one year after the creation of currency futures contracts at the IMM in Chicago. I am still in touch with Mark J. Powers, the father of currency futures (together with Leo Melamed). Mark allocated pension fund money to us in 1990. In their due diligence, he and his partner Mike Dubin put emphasis on knowing
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the manager personally by asking him tricky questions over an extended lunch. I was impressed by this pleasant approach.
I had actually abandoned my successful career as an architect to become a commodity trader and by 1978 a pure currency trader. A highly diversified trend-following system in commodities during the inflationary 1970s was virtually assured to be profitable. When I started a currencies-only system with the five currency pairs then available at the IMM, everyone warned me that this wouldn’t be enough diversification. Tey were proven wrong. While I was an account executive at ContiCommodity in Toronto, the Magnum Program became the company’s star performer, between 1979 and 1983. I presented the program in the United States to 14 branch offices in 17 days. Conti had two thousand account executives world-wide, and the Magnum Program was offered on four continents.
One program unit of $25,000 traded a total of five contracts, one for each currency (DEM, JPY, CHF, USD and CAD). We had a specialist IMM floor trader assigned (Andy Good) who worked our orders on
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